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VOL. 5, JULY 18, 1962 581

Camus vs. Price, Inc.

Nos. L-17858-9. July 18, 1962.

MANUELS. CAMUS, petitioner, vs. PRICE, INC.,

respondent.

Nos. L-17865-6. July 18, 1962.

PRICE,INC., vs. HON.COURT OF APPEALS and

MANUEL S. CAMUS, respondents.

Contracts; Lease; Reciprocal Obligations; Default in the

performance of corresponding duties.—Where, as in the present
case, both parties defaulted in the performance of their
corresponding duties, but it could not be determined with
definiteness who of them committed the first infraction of the
terms of the contract, the parties are in pari delicto and the
contract is deemed extinguished, with the parties suffering their
respective loses.
Same; Same; Same; Same; When lessee may be required to pay
for occupancy of property.—Considering that the lessee was in
continuous occupancy of the premises during the pendency of the
case, conducting and operating its business therein and profiting
thereby, whereas the lessor was not only deprived of the
possession of his property but also of the rentals therefor, said
lessee must be required to compensate the lessor for such
occupancy until it vacates the premises.

ORIGINAL PROCEEDING in the Supreme Court.

Certiorari.

The facts are stated in the opinion of the Court.

     Nicodemus L. Dasig for petitioner Manuel S. Camus.
     Jose C. Reyes & Associates for respondent Price, Inc.
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Camus vs. Price, Inc.

BARRERA, J.:

Antecedent:

On March 30, 1951, Manuel S. Camus and Price, Inc.

entered into a contract of lease, the pertinent terms of
which read:

"1. That the said party of the first part/Lessor (Manuel S. Camus)
hereby grants, demise and let unto the said party of the second
part/Lessee (Price, Inc.), for lawful business purposes, all that
certain strong material building with the lot and parcel of land,
with an area of 1,700 square meters, situated, lying, and being at
No. 60 C. Arellano Street, Malabon, Rizal, covered as Lots Nos. 15
and 16, Block No. 1, Tambobong Estate, Psd-11759 of the Rural
Progress Administration, to have and to hold the same for the full
term of ten (10) years from April 1, 1951 to March 31, 1960,
inclusive, at the monthly rental of P300.00, Philippine Currency,
for the above-mentioned building, to be paid without the necessity
of express demand therefor on the 1st five (5) days of each
ensuing month at the residence of the first part/Lessor at
Malabon, Rizal; and also at the monthly rental of One Hundred
Pesos (P100.00) Philippine Currency, for the use of the leased
premises, payable beginning when the construction of the factory
is already finished, and likewise payable at the time and place
aforementioned;
"2. That the party of the second part/Lessee, shall have or
cause to erect, build or construct a Factory building and
Warehouse of strong materials appropriate to or in furtherance of
tne business of the party of the second part/Lessee, on the said lot,
the plan as to the form and size and other specifications thereof
being subject to the joint approval of both parties concerned, at
the expense of the party of the second part/Lessee; and that the
buildings thereon constructed shall be insured with a competent
insurance Company by the party of the second part/Lessee, in an
amount equal to the insurable interest of the party of the first
part/Lessor, in the sum of at least Fifty Thousand Pesos
(P50,000.00) Philippine Currency, for himself, his heirs and/or
administrators as his beneficiary; and that the insured buildings
(Factory building and Warehouse) hereinbefore mentioned shall
not automatically become, without cost, the property of the first
part/Lessor, immediately upon the termination of this contract;

x           x           x           x           x;

"5. That the party of the first part/Lessor likewise covenants

and agrees to cause or make the necessary filling, at his sole

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expense, within a year from the signing of this contract, the

vacant portion of the lot along the river with an area of

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Camus vs. Price, Inc.

about 500 square meters to increase its elevation and enable the
party of the second part/Lessee, to facilitate or make use of the
whole lot; as well as to construct building or cause to erect the
necessary concrete stone walls provided with barbed wires on top
thereof and all expenses incurred or to be incurred incident to the
filling as well as to the construction, building and erection of the
stone walls, one (1) meter high, with barbed wire to be borne
solely by the party of the first part/Lessor;

x           x           x           x           x;

"14. Provided, always, that in case of a breach of any of the

covenants on the part of the party of the second part/ Lessee,
herein contained, the party of the first part/Leasor, may while the
default shall continue, and notwithstanding any waiver of any
prior breach of conditions, without notice or demand, enter upon
the premises, and thereby terminate this lease and may
thereupon expel and remove the party of the second part/Lessee;
"15. That it is still furthermore agreed that, in case of court
litigation by virtue of non-payment of the agreed rents or any
other breach of this contract on the part of the party of the second
part/Lessee, the party of the first part/Lessor, shall be entitled to
collect P1,000.00 as liquidated damages and P500.00 as attorney's
fees, exclusive of costs legally taxable. (Italics supplied).

On January 19, 1954, the Lessee instituted Civil Case No.

2582 of the Court of First Instance of Rizal against the
Lessor, for specific performance, damages and extension of
the period of the lease, allegedly due to the latter's failure
to comply with the aforequoted provisions of paragraph 6 of
the contract. Three days later, or on January 22, 1954, the
Lessor, in turn, filed in the Justice of the Peace Court of
Malabon an action for unlawful detainer (ejectment)
against the Lessee (Civil Case No. 1159), allegedly by
reason of said defendant's non-payment of rentals since
February 16, 1953.
On February 10, 1954, the Justice of the Peace Court
rendered a decision in the ejectment case, in favor of the
Lessor, ordering the Lessee to vacate the premises and pay
the plaintiff Lessor rentals in arrears amounting to
P4,600.00 and the sum of P400.00 a month until it finally
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delivers possession of the property to the Lessor; liquidated

damages in the sum of P1,000.00; attorney's fees for
P500.00, and costs.
The Lessee appealed to the Court of First instance of
Rizal, filing therein a cash bond to cover the amounts ad-
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Camus vs. Price, Inc.

judged by the Justice of the Peace Court, as well as the

current rentals. The Lessor then filed a motion for
execution of the decision appealed from, which was opposed
by the Lessee. As the Court of First Instance granted said
motion for execution, the Lessee instituted certiorari
proceedings in this Court (G.R. No. L-8253). 1
In issuing the writ of certiorari prayed for therein, on
the ground that the CFI Judge committed a grave abuse of
discretion in issuing an order for the execution of the
decision of the Justice of the Peace Court despite the
"strong equities in favor of Price (Lessee) and the dubious
legality or propriety of the decision of the justice of the
peace court", this Court said:

"In their answer, respondents (Camus, et al.) admit some of the

allegations of the petition and deny other allegations thereof.
Among other things, they, moreover, allege that the obligations of
Camus, under the contract of lease, are independent of those of
Price; that the filling and construction provided in said contract,
have 'already been totally' completed; and that the order of July
24, 1954, and the writ of execution were duly issued, for Price had
failed, either to pay, or to deposit, the amount of the rentals for
April, May and June, 1954.
"At the outset, it should be noted that the very pictures
submitted by respondents, as Annexes 9 and 10 to their answer,
dated October 11, 1954, show that the stone wall constructed by
Camus is of 'adobe,' and has no barbed wire fence, whereas the
contract of lease provides for concretestone walls x x x with
barbed wire. Furthermore, although the portion of the leased
property reproduced in Annex 9 appears to have been filled, there
is widence (which has not been contradicted) to the effect that the
elevation of said portion is lower by 40 centimeters than the
average elevation of said property (see Annex L). Moreover, the
pictures Annexes M, N, and O, taken on February 16, 1954, reveal
that said portion was then unfilled and even under water.
Anyhow, it is not even claimed that said filling and construction
had been completed within the year, which expired on March 20,

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1952, stipulated in the contract of lease. In fact, the answer filed

by respondents before this Court impliedly admits the failure of
Camus to make the filing and construction within said period.
xxx.
"At any rate, there is prima facie, if not strong evidence that
Camus had not complied with some of his obligations under the
contract of lease, and that this breach of contract dates

________________

1 Price, Inc. v. Camus, et al., G.R. No. L-8253, May 25, 1955.

585

VOL. 5, JULY 18, 1962 585

Camus vs. Price, Inc.

back to March 20, 1952, or about eleven (11) months prior to the
alleged default of Price in the payment of rentals (or from
February 16, 1953). xxx."

It was then held that the obligations of the parties in the

contract being reciprocal, the Lessee did not incur in delay
until the Lessor complies with what was incumbent upon
him, applying Article 1169 of the Civil Code.
After the case was remanded to the lower court for
further proceedings, the 2 cases—Civil Cases Nos. 2582 (for
specific performance filed by Price, Inc.) and 2650 (for
unlawful detainer, by Camus) were tried jointly, during
which the parties adduced evidence in support of their
respective allegations. Later, the trial court rendered
judgment ordering (1) the cancellation and return of the
bond to the Lessee (Price, Inc.); (2) said Lessee to insure
the factory building and warehouse for P50,000.00 within 1
month; and (3) the Lessor Camus to fill up the low portion
of the leased premises and enclose the part along the river
with concrete stone walls topped by barbed wire, within 6
months, and pay the costs. The term of the lease contract
was also fixed for 9 years, from compliance by the Lessor of
his aforementioned obligation. Only the Lessor, Manuel
Camus, appealed to the Court of Appeals.

The Case:

In its decision of September 14, 1960, the Court of Appeals,

passing upon the respective obligations of the parties under
the contract, stated:

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"x x x, it was proved that the lot along the Malabon River,
obviously an accretion of lots Nos. 15 and 16, was declared for tax
purposes by Ricardo, now represented by his widow, Rosario
Sevilla Vda. de Camus, on March 12, 1951 (Tax Declaration No.
10202), and he had been paying taxes therefor as follows: for
1948, 1949, 1950 and 1951 paid on March 15, 1951, for 1952 on
March 26, 1952, for 1953 on March 30, 1953, for 1954 on March
17, 1954, and for 1955 on March 30, 1955) (Exh. 14-B). This shows
that prior to March 20, 1951, when the contract of lease was
executed, and prior to the filing of Civil Case No. 2582 by appellee
(Price, Inc.) against appellant (Camus), Ricardo had already been
claiming the possession, if not the ownership, of the lot bordering
the river, which had accumulated by gradual accretion a total
area of 1,425 square meters, the same having been determined
even prior to the execution of

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Camus vs. Price, Inc.

the contract of lease as shown in the tax declaration issued on

March 12, 1952. xxx.
"xxx. Nevertheless, we cannot sustain appellant's contention
that the 500 square meters which he obligated himself to fill up
and construct a fence should be inside the bounderies of lots Nos.
15 and 16, irrespective of the vacant space therein, because
paragraph 5 of the contract of lease is clear that said portion of
500 square meters is along the Malabon River. This portion is
separate and distinct from the 1,700 (should be 1,761) square
meters of land leased under paragraph 1 of said contract. Still, it
is unreasonable to conclude that appellant intended to include the
entire area of 1,425 square meters along the river, nor that he
only miscalculated the exact area thereof, as the land he leased to
appellee. Under the stated facts, we, therefore, hold that
appellant, with the apparent conformity of Sy Suan, referred in
paragraph 5 of the contract of lease to only a portion of 500 square
meters of the entire area containing 1,425 square meters, and
that he bound himself to fill up said portion at his expense and to
enclose with a one-meter high stone wall and barbed wire on top
within a period of one year from March 20, 1951.
"To require appellant, as the lower court held, to finish filling
up the entire area bordering the Malabon River and to surround it
with a concrete wall throughout the river bank, would seem
unfair to said appellant and contrary to the true intention of the
parties in the contract of lease, the principal reason being that the
entire area of the lot along the river is undisputedly 1,425 square
meters, and riot only 500 square meters isstipulated in paragraph
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5 of the contract. Besides, it, is illogical to allow appellee to utilize

more than 500 square meters. Neither would it be just to compel
appellant to incur expenses in filling up and building a fence for
more than 500 square meters, even if appellee allegedly planned
to build a 'hot-room' and 'cool-room.' However, in failing to fill up
500 square meters of the vacant lot along the Malabon River,
appellant just the same violated the contract
"x x x. Although we subscribe to the view that reciprocal
obligations are embodied in the contract of lease, yet, we cannot
see our way clear that it was appellant who first committed the
breach thereof. Undoubtedly, appellee did not insure the factory
building and warehouse. Sy Suan's testimony on this point that
he tried to insure but the premiums charged were too high on
account of the absence of a stone wall along the river bank, is
unmeritorious. When asked, he could not even mention the name
of the insurance company he approached, much less the amount of
premiums allegedly charged.
"Moreover, upon failure of appellee to pay rentals, appellant
wrote it a letter on January 4, 1954. The question of filling up the
vacant lot along the river in accordance with paragraph 5 of the
contract of lease was brought up by appellee only in its

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Camus vs. Price, Inc.

letter of reply dated January 11, 1954. As things stand, in so far

as the third issue is concerned, we cannot really determine who
between the parties was actually the first who violated the
contract. What we see is, that the parties are in pari delicto. xxx."

Based on the foregoing findings, the Court of Appeals

declared the contract extinguished, but the parties were
made to bear their own losses. (Art. 1192, Civil Code).
However, as the Lessee was found to be in continued
possession of the properties and in operation of its business
during the pendency of the case, it was ordered to
compensate the Lessor in the sum of P200.00 a month from
Feb-ruary 16, 1953 until it vacated the premises.
Furthermore, the lifetime of the contract, having expired
on March 31, 1960, the factory building and the warehouse
were declared to have automatically become the properties
of the Lessor.
From said decision, both parties appealed to this Court.
The Lessor, as appellant (in Nos. L-17858-59), contends
that the Court of Appeals erred in not finding the Lessee
Price, Inc. as the first violator of the contract, and in
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requiring the latter to pay him only the amount of P200.00

a month for the use and occupation of the properties from
February 16, 1953 until the same are finally vacated.
In its appeal (Nos. L-17865-66), the Lessee, on the other
hand, maintains that the Court of Appeals erred in not
declaring the Lessor as the first to have committed the
breach of the agreement; in requiring said lessee to
compensate Camus in the amount of P200.00 a month
notwithstanding its finding that the parties are in
paridelicto, and must suffer their own damages; and
holding the lease to have terminated as of March 31, 1960.
From the factual findings of the Court of Appeals
heretofore quoted, which we are not here to review, it
appears that the strip of land, with an area of 1,425 square
meters, was not originally part of lots 15 and 16 subject of
the contract; that the Lessor actually started the filling in
and fencing of a portion of 500 square meters thereof, as
undertaken by him, but did not completely comply
therewith, the fence being only of adobe stone without
barbed wires, and the filling being 40 centimeters lower
than the eleva-
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Camus vs. Price, Inc.

tion of the lot under lease; that, on the other hand,

notwithstanding the completion of the factory building and
warehouse, the Lessee, in his turn, failed to secure
insurance therefor as stipulated; that the Lessee, likewise,
defaulted in the payment of the rentals as of February 16,
1953; and that the Lessor's failure to comply with its
obligation could not be the cause of the Lessee's non-
fulfillment of its commitments under the contract. With
these established facts, the conclusion reached by the Court
of Appeals, that the parties are in pari delicto is not
without foundation or justification.
Although in the incidental case G.R. No. L-8253, this
Court in effect declared the Lessor Camus prima facie to be
the first to commit a breach of the agreement, it may be
pointed out that in making such pronouncement, only the
matter of the Lessee's default in the payment of rentals
was considered. Upon the continuation of the proceedings,
however, it was established, as so found by the Court of
Appeals, that the Lessee also failed to cover the buildings
in September, 1951, with insurance in violation of the
specific terms of the contract. As a matter of fact, until the
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instant cases were filed, no such insurance was drawn on

the aforesaid factory building and warehouse.
Upon the other hand, while it may be true that the duty
imposed on the Lessor under the contract, to increase the
elevation of the low portion of the lot and erect thereon a
concrete stone wall topped with barbed wire was provided
only to "facilitate or make use (by the Lessee) of the whole
lot"—allegedly a subordinate and collateral condition of the
contract—it is not herein denied that such condition was
not complied with by the Lessor. And this obligation
matured in March, 1952. Even assuming, therefore, that
the Lessee's obligation to insure the building arose after
the completion of the construction of the buildings in
September, 1951, as the Lessor also defaulted in the
performance of his corresponding duty, it can not really be
determined with definiteness who of the parties committed
the first infraction of the terms of the contract. Under the
circumstances, the conclusion reached by the Court of
Appeals, that the parties are actually in pari delicto, must
be sustained, and the contract deemed extinguished, with
the parties suffering their respective losses.
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Camus vs. Price, Inc.

Considering, however, that the Lessor was (and must still

be) in continuous occupancy of the premises during the
pendency of the case, conducting and operating its business
therein as usual and profiting thereby, whereas the Lessor
was not only deprived of the possession of his property but
also of the rentals therefore since February 16, 1953, said
Lessee must be required to compensate the Lessor for such
occupancy. The Lessor, on the other hand, as a result of the
termination of the lease, will acquire the buildings of the
Lessee which were constructed on the leased premises.
Under the circumstances of the case, we find the decision of
the Court of Appeals directing the payment by Price, Inc. of
the sum of P200.00 per month from February 16, 1953,
until it vacates the premises, to be in accord with justice.
WHEREFORE, the decision of the Court of Appeals
appealed from is hereby affirmed in all respects, without
costs. So ordered.

          Bengzon, C.J., Padilla, Labrador, Paredes, Dizon,

Regala,and Makalintal, JJ., concur.

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     Bautista Angelo, Concepcion and Reyes, J.B.L., JJ.,

took no part.

Decision affirmed.

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